C&W Industrial Research MarketNote: How are State Sales Taxes Affecting Site-Selection for E-Commerce Fulfillment Centers?
In the early age of e-commerce, the concept of sales tax nexus posed interesting considerations and questions for online sales distribution center site selection. This has also fueled much debate in the retail sector, as traditional bricks and mortar retailers raised concerns that e-commerce companies held an unfair advantage in their ability to sell goods to some customers without charging state sales tax, depending on where the seller had located their DC. The Marketplace Fairness Act (which has already passed the Senate and is pending in the House of Representatives), along with advances in online purchasing software, and the continuing evolution of omni-channel retailing, have continued to change the landscape for the so-called ‘Internet Sales Tax’ debate. So with possible passage of this bill looming and with some states already levying internet sales taxes, will sales tax rates influence DC site selection? It may be too early to say for certain, but recent e-commerce distribution center activity appear to suggest that same-day/next day delivery, freight cost considerations, and customer service expectations are higher priorities.